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Will low-tax Colorado drive away drill-baby-drillers?

Date Published: 10/25/2008

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I spend parts of the year in western Colorado, where the oil and gas boom is causing the local economy to behave in ways that don't always track the rest of the nation's. For example, the housing boom is only starting to tail off here, and local businesses have a hard time finding employees because the oil patch pays much higher salaries for minimally skilled positions.

But in one respect, Colorado is like everywhere else: It has businesses complaining that higher taxes will drive them to other states. And no one cries louder than... the high-paying energy industry!

Now, even in this "drill, baby, drill" age, it should be apparent that oil and gas producers are not going to pull up stakes and head for New Hampshire or Indiana. If they want to drill, they have to go where the resources are.

For now, those untapped oil and gas deposits are in Colorado, Wyoming, New Mexico, Utah and Montana. And guess what? Colorado has the lowest effective tax rates on energy production among those states.

According to a study by Montana-based Headwaters Economics, an independent nonprofit research group, as of 2006, the rates ranged from 6.2 percent in Colorado to 15.9 percent in Wyoming.

So in effect, the companies that have been flocking to Colorado to bid for new oil leases are saying, don't raise our taxes or we'll leave

Posted in:
Economic Development · Taxes

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